ABN AMRO funds rebranded Fortis
The ABN AMRO Asset Management Australia business has been rebranded Fortis Investment Management Australia, following the completion of the separation of the worldwide ABN AMRO funds management business and its merger with Fortis Investments. Fortis has, like many other fund managers operating in Australia, taken steps to provide an equity ownership incentive to its funds management talent, establishing an investment management company, Fortis Investment Partners. Former senior ABN AMRO Australian equities investment staff own 60 per cent of the equity in the company, and Fortis Investment Management Australia the remaining 40 per cent.
Australian Ethical hires new chief investment officer
Canberra-based ethical investing specialist Australian Ethical has hired Martin Halloran as chief investment officer, replacing David Ferris, who left the position in March this year. Halloran was most recently managing director, global markets at National Australia Bank’s institutional funds management business nabCapital, and worked previously for the Commonwealth Bank, leading teams responsible for the development of new investment and risk management products.
Halloran encounters a mixed legacy. Australian Ethical – Equities, which contains both domestic and offshore exposures, has been showing some signs of improvement, although Australian Ethical Large Companies Share continues to wallow. In our most recent research report, we commented that the valuation discipline for Australian Ethical’s management of shares lacked rigour, and that the levels of insight were not as high as we would have expected.
Elsewhere, Halloran will need to come to grips with the firm’s brave attempt at running an international share fund from Australia, the year-old Australian Ethical – World. He’ll also need to work at turning around the fortunes of the A$192.40 million Australian Ethical – Balanced, which has been a consistently fourth-quartile performer in the Multi-Sector Balanced category over the last six months, one year, and three years.
Colonial First State shuts down hedge funds business
Colonial First State is terminating its range of hedge fund-of-fund products, run by the team headed by David Bell, after failing to achieve sufficient scale. The funds affected include Colonial First State Wholesale Global Diversified Strategies, Colonial First State Wholesale Relative Value Share Strategies, and Colonial First State Wholesale Tactical Strategies. The fund manager estimated a six-month sell-down period in late May for most of the assets, and said that remaining assets may take a further 12 to 18 months to sell, because they are more difficult to convert into cash. Management fees are not being charged during the sell-down period.
Change in top ranks at Credit Suisse
Credit Suisse Asset Management appointed Stephen Giubin in July as head of asset management and Gailie McIntyre as deputy head. Giubin is concentrating on managing the firm’s investment teams, while McIntyre is focusing on client service. Giubin was formerly Credit Suisse’s head of Australian equities, having joined the firm a year ago from Schroders. McIntyre has been with Credit Suisse since 1995, and held positions in operations and administration in the investment banking and asset management divisions in Melbourne, Sydney, Hong Kong, and Tokyo. Most recently she was chief operating officer for the asset management business from February 2006.
Equity Trustees winds up high income funds
Following Lehman Brothers’ decision to withdraw from offering investment management services in Australia, Equity Trustees is winding up the EQT High Income and EQT Wholesale High Income funds. (The “Lehman” moniker has also been dropped from the funds’ names.) TechInvest, appointed in August to manage the process, has in turn hired Sydney fixed interest specialist Spectrum Asset Management to realise the funds’ holdings.
The situation here appears to be the outcome of a global parent shutting down non-core businesses during a time of extreme uncertainty. The High Income funds invested in riskier securities than vanilla fixed interest funds, so selling these down will not be as easy. There are also some illiquid holdings, such as an exposure to unlisted property which are likely to take some time to liquidate.
ING large-cap portfolio managers, analysts decamp
ING Investment Management joint directors of equities Paul Cuddy and Mark East and analysts Michael Chun and Michael Malseed decamped in June to establish Bennelong Australian Equity Partners, a subsidiary of Melbourne-headquartered Bennelong Group. Core and concentrated domestic share funds are planned for launch in October. ING moved quickly to appoint replacements from within its global business, transferring Guy Uding, a senior portfolio manager from the firm’s Asia Pacific investment team, and Tycho van Wijk, a senior portfolio manager/analyst from ING’s European operations.
In a panel discussion at this year’s Morningstar Investment Conference, culture, morale, profit sharing, and equity ownership were identified as the key elements in the “war for talent” between boutiques and institutional funds management businesses. ING appears to have been unable to satisfy Cuddy, East, and their colleagues’ ambitions in these areas. (A subsequent statement on Bennelong’s website describes their move as having been “driven by a desire to establish their own business with like-minded investment professionals”.)
Macquarie small-caps co-portfolio manager heads for Honkers
Macquarie Funds Management’s co-head of Smaller Companies, John Bugg, is relocating to Hong Kong to lay the groundwork for a new Asian smaller companies capability which will apply the same investment philosophy as used in local smallcap stock-picking. Bugg will continue with research responsibilities for Macquarie’s Australian smaller companies assets with Neil Carter, along with portfolio manager David Walsh and analysts Krista Walter and Matthew Griffin.
Macquarie has also hired MMC and Paradice alumnus Sam Le Cornu to work alongside Bugg in Hong Kong. Macquarie’s smaller companies funds had a red-hot streak for several years, but have come off the boil more recently. The flagship Macquarie – Small Companies fund underperformed the index by 15 per cent over the 2007/08 financial year. In our most recent report, we noted that the strategy’s short-term volatility can be “stomach-churning” for many investors.
Pengana loses another property portfolio manager
Finally, portfolio manager Mark Thorpe-Apps has left Sydney property boutique Pengana Capital. He’d been a founding member of the firm in 2003, having accompanied Stuart Stuckey from BT Financial Group. (Stuckey’s now based in London, running the firm’s global property investing.) Management of the firm’s flagship Pengana Property Securities has passed solely to Elan Miller, appointed last year to run the fund jointly with Thorpe-Apps. Head of research Tim Shaw and analysts Adrian Elsworth and Tom Threlfall have taken over Thorpe-Apps’ other duties.
Thorpe-Apps’ departure is yet another in a series of changes in the people behind this strategy over the past five years. Management was undertaken initially by Thorpe-Apps and Stuckey; then Thorpe-Apps and Ern Koh; then Thorpe-Apps and Stephanie Fisher, who lasted just over a year from September 2006 to November 2007; and most recently, Thorpe-Apps and Miller. Investors would benefit from a period of stability in investment management personnel.
Shadow Treasurer Malcolm Turnbull sold his one-third stake in Pengana to National Australia Bank funds management incubation subsidiary nabInvest in May
